No Tax Solution Yet As Minnesota Legislative Session Winds Down

Taxes remain a key issue as the Minnesota House, Senate and governor’s office negotiate a final budget deal in the last days of the 2013 legislative session.

House-Senate tax conference committee members exchanged a number of proposals Wednesday, but did not come to a solution. They have agreed to raise about $2 billion in new revenue, but differ on how to do it.

Members are slowly coming closer to creating a new fourth-tier income tax bracket for the richest Minnesotans, likely to land somewhere between 8.94 percent and 10.6 percent. The current top tier rate is 7.85 percent.

The House also still wants a surcharge on those making $500,000 or more for up to two years, to repay schools for money the state borrowed from them. That would add up to nearly $900,000 on top of the $2 billion.

Committee members still disagree on alcohol and cigarette tax increases. The House proposes an alcohol tax, but the Senate does not include it, and they had not landed on a final cigarette tax increase amount by Wednesday evening.

House Taxes Committee Chairwoman Ann Lenczewski, DFL-Bloomington, said the House will propose Gov. Mark Dayton’s plan to fund a shortfall in Vikings stadium construction money, but the governor’s plan has not been released.

The members also are exploring sales tax changes such as expanding it to warehousing and storage, which primarily would affect businesses. The House proposed a 13 percent sports memorabilia tax to bring money to the state’s general fund as well.

Former tax chairman Rep. Greg Davids, R-Preston, said no matter where the committee lands, the total amount they plan to raise is too high for Republicans. “It’s so far gone for anyone in our caucus to support.”

Davids acknowledged that Republicans have little say in the final plan because Democrats have enough votes as the majority in the House and Senate to pass it.

“When you have no balance, this is what you get,” Davids said.

The Minnesota Constitution requires legislators to wrap up their work for the year Monday, and while tax debate continues, the first negotiated budget bills are headed to final votes.

A jobs and economic development bill was merged with one setting solar energy standards and was due for a late Wednesday House debate.

Major finance conference committees with work remaining Wednesday included those dealing with public school education, health and human services, environment and agriculture, transportation, public safety, higher education and state departments.

The House and Senate have passed their own versions of finance bills, and conference committee negotiators are merging their work with a budget plan offered by Dayton.

With most conference committee work expected to be done by Friday night, the end of the session likely will be busy with lawmakers passing the entire $38 billion, two-year budget in its final hours.

Republicans have said Democrats might struggle to meet their deadline.

“We’ve got several moving parts,” Davids said. “I don’t know if they can get done on time.”

Earlier this week, Senate Majority Leader Tom Bakk, DFL-Cook, worried aloud that Republicans could filibuster and delay progress on spending bills that make up the budget.

“It is possible they could talk things to death and run out the session,” Bakk said.

Democrats control the House, Senate and governor’s office and can pass nearly every bill without Republican help. However, a proposed $800 million public works finance bill does need some GOP votes, and the party’s legislative leaders have not been very supportive.

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ABOUT

Don Davis

Davis has covered Minnesota politics and government for Forum Communications Company/Forum News Service since 2001. He is an Iowa native who was a reporter and editor at newspapers there, leaving the state to edit newspapers in Illinois, Oklahoma and Wyoming before becoming a full-time political reporter in North Dakota. Now, more than 40 newspapers that serve Minnesota print his stories.